Effects of Policies on Farming Households

What is it about?

In Nigeria, several agricultural policy instruments and programs have been initiated after Structural Adjustment Program (SAP) in 1986 to bring about positive changes in agriculture. These are rice trade liberalization, input subsidy, cassava initiative program which were made to promote competition in the agricultural sector. The agricultural policy instruments according to Olomola (2006aa), distorted the input market because of poor implementation and often benefit unintended target group who manipulate the supply of inputs such as fertilizer by creating artificial scarcity in the market. This affects the cost of production and consumption of crops across the country. As a result of poor market information coupled with bad infrastructures, the market women and buying agents usually worsen the situation by exploiting the farmers in offering a low farm gate price and ultimately low income. When the presidential initiative on cassava came on board in 2002, which aimed at using cassava as an engine of growth through export, many crop farmers responded to this incentive as a way of improving welfare. This further affected the production and consumption of other crops that are substitutes to cassava. In 2008, the government liberalized trade in rice (a substitute to other food crops in the market especially yam) so that the consumers can buy this commodity at a reduced price. Wunder (2005) inferred that trade liberalization and subsidy removal are powerful macroeconomic tools which have complex economy-wide effect on farmer’s allocation of resources in production and consumption. Farmers attempt to reduce price risk by diversifying production activities and income sources, and they are very flexible in switching between different crops in response to changing market condition. When prices are affected, competitiveness will be affected and ultimately farmers welfare.

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Why is it important?

Policies affect some crops and households indirectly. Dorosh (2003) studied the impact of agricultural policies on food crops and established that the indirect effect was very large and had largest impact on the poor. Peters (2004) added that agricultural policies often have adverse effects on root and tuber producers and consumers. However, since there is no policy or policy pronouncements specific to yam in Nigeria, any policy that affects its substitutes such as rice and cassava will certainly affect yam.

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